I found this video to be very enlightening as to what can happen, and we should expect in the near future. Not because the economic crisis or any "sky is falling" prediction. Simply because homeowners are smart people, and making payments for a product (a house) that is worth 50% of what they are paying just doesn't add up.
We were raised by our parents, to respect our debts, to be responsible; add to this, the fact that our home is our protected environment, our nest, a place where we take care of our family; all this is what makes us want to keep our homes, to keep on paying more than what it is worth.
But when you stop and think how much is this really costing you, you discover an alarming truth....you are giving away your retirement, you are spending hundreds of thousands of dollars that you will probably never see; you will probably not be able to retire if you decide to keep your home at any cost.
Take a few minutes to watch this video, it is an eye opener.
If, after watching it, you think we can help you short sell your home, contact us, we have a lot of experience doing this. And one thing I am sure will happen is that the Banks and the Government will sooner than later create a big roadblock to prevent "Strategic short-sales" from happening, and that is not far away. If you are thinking of doing it, you better do it now!
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Friday, May 14, 2010
Tuesday, April 20, 2010
Official Waiting Period After a Short Sale
Fannie Mae is changing the required waiting period for a borrower to be eligible for a mortgage loan after a preforeclosure event. The waiting period commences on the completion date of the preforeclosure event, and may vary based on the maximum allowable LTV, CLTV, and HCLTV ratios (referred to herein as LTV ratios) and occupancy of the property. These new policies will be updated in the Selling Guide, B3-5.3-07, Derogatory Credit Information, and in B3-5.3-10, DU Credit Report Analysis. The new "Official" waiting period after a Pre-foreclosure event:
Announcement SEL-2010-05
Short Sale (With Extenuating Circumstances) 2 years for 90% maximum LTV ratios
Fannie Mae’s policies for extenuating circumstances remain unchanged and are fully described in the Selling Guide, B3-5.3-08, Extenuating Circumstances for Derogatory Credit.
Fannie Mae is changing the required waiting period for a borrower to be eligible for a mortgage loan after a preforeclosure event. The waiting period commences on the completion date of the preforeclosure event, and may vary based on the maximum allowable LTV, CLTV, and HCLTV ratios (referred to herein as LTV ratios) and occupancy of the property. These new policies will be updated in the Selling Guide, B3-5.3-07, Derogatory Credit Information, and in B3-5.3-10, DU Credit Report Analysis. The new "Official" waiting period after a Pre-foreclosure event:
Announcement SEL-2010-05
Short Sale (With Extenuating Circumstances) 2 years for 90% maximum LTV ratios
Fannie Mae’s policies for extenuating circumstances remain unchanged and are fully described in the Selling Guide, B3-5.3-08, Extenuating Circumstances for Derogatory Credit.
Friday, April 16, 2010
CRIMINAL CHARGES AGAINST THE BIG WALLSTREET GUYS???
Wow! Shocking security fraud charges against Wall Street behemoth Goldman Sachs are likely to affect the markets in the short term but unlikely to have longer-lasting effects, market experts said.
Stocks dropped sharply and Goldman [GS 158.52 -25.75 (-13.97%) ] in particular surrendered well over 10 percent in share price, but the reaction on trading floors and from portfolio managers is that investors will get over the shock in short term.
"Everything we're dealing with happened a couple of years ago," said Dave Lutz, managing director of trading for Stifel Nicolaus in Baltimore. "Ultimately, once this noise has washed out, it's going to translate into one heck of a buying opportunity."
Anton Schutz, portfolio manager at Burnham Financial Services, called the investigation into Goldman "a witch hunt" and politically expedient at a time when Main Street investors are increasingly suspicious of Wall Street business practices.
The prevailing sentiment was that the damage to Goldman and the financial markets would only provide opportunity.
The negative effect for Goldman Sachs will be "significant," but will be a "short-term problem" for the company, said Dick Bove, an analyst for Rochdale Securities. "Whenever the SEC issues these type of charges against a company, there's generally a long, drawn-out legal battle that will change the company's procedures. But it will be a short-term problem. For the long term, it will pass," Bove said.
However, the quick decline also could set up for those with a more immediate time horizon
"The Goldman news today could cause the same market reaction as (President) Obama’s announcement in January that he would seek to regulate the business practices of our nations banks," said Thomas H. Kee Jr., President and CEO of Stock Traders Daily.
"From there, the market fell hard. From here, because the technicals and fundamentals are showing resistance at the same time, a similar market decline can follow. In January, the technicals and fundamentals lined up too. More importantly though, many short sellers were lined up then, and they are lined up now. There are plenty of similarities. In January, the button was pushed by Obama. This time, it was pushed by the SEC."
All in a day's work!
Wow! Shocking security fraud charges against Wall Street behemoth Goldman Sachs are likely to affect the markets in the short term but unlikely to have longer-lasting effects, market experts said.
Stocks dropped sharply and Goldman [GS 158.52 -25.75 (-13.97%) ] in particular surrendered well over 10 percent in share price, but the reaction on trading floors and from portfolio managers is that investors will get over the shock in short term.
"Everything we're dealing with happened a couple of years ago," said Dave Lutz, managing director of trading for Stifel Nicolaus in Baltimore. "Ultimately, once this noise has washed out, it's going to translate into one heck of a buying opportunity."
Anton Schutz, portfolio manager at Burnham Financial Services, called the investigation into Goldman "a witch hunt" and politically expedient at a time when Main Street investors are increasingly suspicious of Wall Street business practices.
The prevailing sentiment was that the damage to Goldman and the financial markets would only provide opportunity.
The negative effect for Goldman Sachs will be "significant," but will be a "short-term problem" for the company, said Dick Bove, an analyst for Rochdale Securities. "Whenever the SEC issues these type of charges against a company, there's generally a long, drawn-out legal battle that will change the company's procedures. But it will be a short-term problem. For the long term, it will pass," Bove said.
However, the quick decline also could set up for those with a more immediate time horizon
"The Goldman news today could cause the same market reaction as (President) Obama’s announcement in January that he would seek to regulate the business practices of our nations banks," said Thomas H. Kee Jr., President and CEO of Stock Traders Daily.
"From there, the market fell hard. From here, because the technicals and fundamentals are showing resistance at the same time, a similar market decline can follow. In January, the technicals and fundamentals lined up too. More importantly though, many short sellers were lined up then, and they are lined up now. There are plenty of similarities. In January, the button was pushed by Obama. This time, it was pushed by the SEC."
All in a day's work!
Wednesday, April 14, 2010
HOW DOES THE SUDDEN DEATH OF REO'S AND SHORT SALES AFFECT REALTORS?
Responding to concerns about my last posting, I thought I would share my response to an Agent about what I think would happen to our industry in the near term, if REO and Short sales are severely restricted.
I think we need to think that is will be great for the Country and the Economy, and that will result in a more stable and long lasting recovery of our Industry.
Short term, I think it will cancel a great deal of short sales, even the ones that are listed, being negotiated and even those that are ready to close soon. REOs will also be reduced to a minimum.
Minimum and cancellation does not mean, we will have ZERO business. I think it will take 60% to maybe 70% of the properties off the table (will not be foreclosed or short sold), we will still have foreclosures and short sales, and a lot of the ones that accept the 3 month trial will end up trickling back into foreclosure or short sale.
We will also have many investor owned properties in default, that will be harder to qualify to modify and where investors are less likely to negotiate with the banks.
On the bright side, the dissipating of the Shadow Inventory, will make the market very stable, the economy is already recovering and growing, the stability will bring confidence in the system and our economy will begin a very, very strong recovery and we might even see the beginning of a GREAT ECONOMY very soon. This will bring a healthy Real Estate market throughout the Nation, and we will go back to doing great, just like before this meltdown.
The ones that should be sorry, are the handful of agents that horded the REOs and treated the rest of us like crap, the ones that thought they were the "Middle Kingdom", for those, the time to pay the piper is closing in......... and I am sooooo glad.
Responding to concerns about my last posting, I thought I would share my response to an Agent about what I think would happen to our industry in the near term, if REO and Short sales are severely restricted.
I think we need to think that is will be great for the Country and the Economy, and that will result in a more stable and long lasting recovery of our Industry.
Short term, I think it will cancel a great deal of short sales, even the ones that are listed, being negotiated and even those that are ready to close soon. REOs will also be reduced to a minimum.
Minimum and cancellation does not mean, we will have ZERO business. I think it will take 60% to maybe 70% of the properties off the table (will not be foreclosed or short sold), we will still have foreclosures and short sales, and a lot of the ones that accept the 3 month trial will end up trickling back into foreclosure or short sale.
We will also have many investor owned properties in default, that will be harder to qualify to modify and where investors are less likely to negotiate with the banks.
On the bright side, the dissipating of the Shadow Inventory, will make the market very stable, the economy is already recovering and growing, the stability will bring confidence in the system and our economy will begin a very, very strong recovery and we might even see the beginning of a GREAT ECONOMY very soon. This will bring a healthy Real Estate market throughout the Nation, and we will go back to doing great, just like before this meltdown.
The ones that should be sorry, are the handful of agents that horded the REOs and treated the rest of us like crap, the ones that thought they were the "Middle Kingdom", for those, the time to pay the piper is closing in......... and I am sooooo glad.
THE END OF REO AND SHORT SALES IS NEAR?....Quite possibly yes!
The Banking industry, through HAFA, might have pulled out a genius move: To disipate the "Shadow Inventory" cloud, without writting off their debt, without changing non performing loans to the liability column, without affecting the balance of their reserves..... They did this, plus: They removed the stigma of a "Tsunami" of foreclosures that would bring prices down.
Plus: They are keeping America in their houses.
All these was accomplished in a swift move, in which Banks decided to contact millions of borrowers in default, some already involved in short sale of their homes; offering a 3 month trial period at a very reduced monthly payment, with the promise of modifying their loan if they pay ontime.
The smart thing about this is, that banks will not reduce the principal owed by the borrower, they simply will drop rate, will extend the term, will do whatever it takes to reduce the monthly payment, to a level that the homeowner will qualify to pay, and schedule an escalation of this payment during the next 5 years, ending with a payment similar to where it was at the beginning, after 5 or 7 years. After all, the Fed. rate for banks is something like 1%, so whatever the banks do, they will still be making a profit.
By the time the borrower realices that his payment is too high (after 5 or 7 years), properties will most likely will be back to the value they had before the big drop, so if the borrower decides to sell, it would not be a short sale anymore.
Genius..... the only victims, unfortunatelly are the Realtors, but this is just the first 3 to 5 months, in the end, the whole economy benefits from this great idea, and that itself means a great Real Estate market with regular sales, no more REO Gurus or Gods, in the near future.
God Bless America!!!
The Banking industry, through HAFA, might have pulled out a genius move: To disipate the "Shadow Inventory" cloud, without writting off their debt, without changing non performing loans to the liability column, without affecting the balance of their reserves..... They did this, plus: They removed the stigma of a "Tsunami" of foreclosures that would bring prices down.
Plus: They are keeping America in their houses.
All these was accomplished in a swift move, in which Banks decided to contact millions of borrowers in default, some already involved in short sale of their homes; offering a 3 month trial period at a very reduced monthly payment, with the promise of modifying their loan if they pay ontime.
The smart thing about this is, that banks will not reduce the principal owed by the borrower, they simply will drop rate, will extend the term, will do whatever it takes to reduce the monthly payment, to a level that the homeowner will qualify to pay, and schedule an escalation of this payment during the next 5 years, ending with a payment similar to where it was at the beginning, after 5 or 7 years. After all, the Fed. rate for banks is something like 1%, so whatever the banks do, they will still be making a profit.
By the time the borrower realices that his payment is too high (after 5 or 7 years), properties will most likely will be back to the value they had before the big drop, so if the borrower decides to sell, it would not be a short sale anymore.
Genius..... the only victims, unfortunatelly are the Realtors, but this is just the first 3 to 5 months, in the end, the whole economy benefits from this great idea, and that itself means a great Real Estate market with regular sales, no more REO Gurus or Gods, in the near future.
God Bless America!!!
Monday, April 12, 2010
ECONOMIC INDICATORS (Explained):
The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 8.2% in February after a revised 7.8% decrease in January. The February reading was the largest gain since October 2001. MEANS BUYERS ARE BACK, HOUSES ARE NOT DROPPING IN PRICE....THIS IS GREAT!
According to the Federal Reserve, consumer credit debt fell in February by $11.5 billion, an annual rate of 5.6%. Economists had forecast that consumer debt would rise by $500 million. Consumer credit rose in January by $10.6 billion, ending a record 11 consecutive months of decline. MEANS PEOPLE ARE NOT SPENDING AS MUCH AS THEY WERE BEFORE THIS CRISIS, WE ARE BEING MORE CONSERVATIVE...THIS IS GOOD, SLOWS THE RECOVERY BUT IS GOOD.
Sales at U.S. retail chains rose 9.1% in March. It was the largest monthly jump since recordkeeping began in 2000. Economists had anticipated a 6.3% increase. WE ARE MORE CONFIDENT, WE ARE SPENDING WHERE IT IS NEEDED...THIS IS GOOD.
Initial claims for unemployment benefits unexpectedly rose by 18,000 to 460,000 in the week ending April 3. Continuing claims for the week ending March 27 fell by 131,000 to 4.55 million..THIS IS NOT GOOD, WE STILL HAVE BIG UNEMPLOYMENT, THE ECONOMY IS GETTING STRONGER AND JOBS WILL BE BACK, UNFORTUNATELLY THEY ALWAYS TAKE A LONG TIME TO DO SO.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending April 2 fell 11%. Purchase volume increased 0.2%. Refinancing applications fell 16.9%...MORE HOME BUYERS, THIS IS GOOD...NOT THAT MANY REFINANCING, IS OBVIOUS...THERE IS NO EQUITY!
The Commerce Department said wholesalers increased their inventories by 0.6% in February following a revised 0.1% rise in January. Sales at the wholesale level rose 0.8% in February, marking the 11th straight monthly gain..THIS IS GOOD, IT SHOWS CONFIDENCE IN THE ECONOMY...THIS IS ALL WE NEED TO BRING IT BACK!
WE ARE THE WORLD....WE ARE THE CHILDREN....LA LA LA LA LA
The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 8.2% in February after a revised 7.8% decrease in January. The February reading was the largest gain since October 2001. MEANS BUYERS ARE BACK, HOUSES ARE NOT DROPPING IN PRICE....THIS IS GREAT!
According to the Federal Reserve, consumer credit debt fell in February by $11.5 billion, an annual rate of 5.6%. Economists had forecast that consumer debt would rise by $500 million. Consumer credit rose in January by $10.6 billion, ending a record 11 consecutive months of decline. MEANS PEOPLE ARE NOT SPENDING AS MUCH AS THEY WERE BEFORE THIS CRISIS, WE ARE BEING MORE CONSERVATIVE...THIS IS GOOD, SLOWS THE RECOVERY BUT IS GOOD.
Sales at U.S. retail chains rose 9.1% in March. It was the largest monthly jump since recordkeeping began in 2000. Economists had anticipated a 6.3% increase. WE ARE MORE CONFIDENT, WE ARE SPENDING WHERE IT IS NEEDED...THIS IS GOOD.
Initial claims for unemployment benefits unexpectedly rose by 18,000 to 460,000 in the week ending April 3. Continuing claims for the week ending March 27 fell by 131,000 to 4.55 million..THIS IS NOT GOOD, WE STILL HAVE BIG UNEMPLOYMENT, THE ECONOMY IS GETTING STRONGER AND JOBS WILL BE BACK, UNFORTUNATELLY THEY ALWAYS TAKE A LONG TIME TO DO SO.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending April 2 fell 11%. Purchase volume increased 0.2%. Refinancing applications fell 16.9%...MORE HOME BUYERS, THIS IS GOOD...NOT THAT MANY REFINANCING, IS OBVIOUS...THERE IS NO EQUITY!
The Commerce Department said wholesalers increased their inventories by 0.6% in February following a revised 0.1% rise in January. Sales at the wholesale level rose 0.8% in February, marking the 11th straight monthly gain..THIS IS GOOD, IT SHOWS CONFIDENCE IN THE ECONOMY...THIS IS ALL WE NEED TO BRING IT BACK!
WE ARE THE WORLD....WE ARE THE CHILDREN....LA LA LA LA LA
Friday, April 2, 2010
SOCIAL MEDIA, THE NEXT BIG WAVE???
I think Social Media will be the future "dot.com" trend, right now it might be worthless, silly and aparently pointless, specially for those of us who are more analytical and business oriented. But sooner than later, a critical mass of users will be reached, and social media will then become an incredibly powerful tool, software will take advantage of it, windows or whatever the leading company is at that time will incorporate tools that we haven't even dreamed about, based on social media network. All because in the end, it is a NETWORK, and incredibly intricate network like we have never seen before. There will be a time when we will all be connected to it, and it will become the most powerful network ever.
GOD BLESS THE FUTURE !!!
What do you think?
I think Social Media will be the future "dot.com" trend, right now it might be worthless, silly and aparently pointless, specially for those of us who are more analytical and business oriented. But sooner than later, a critical mass of users will be reached, and social media will then become an incredibly powerful tool, software will take advantage of it, windows or whatever the leading company is at that time will incorporate tools that we haven't even dreamed about, based on social media network. All because in the end, it is a NETWORK, and incredibly intricate network like we have never seen before. There will be a time when we will all be connected to it, and it will become the most powerful network ever.
GOD BLESS THE FUTURE !!!
What do you think?
Tuesday, March 30, 2010
Strategic Defaults…Who Is Doing Them, How Many Are Happening…How Bad Will It Get?
Back in 07 when this phenomena was one of those topics we would receive criticism for reporting on. The critics suggested that by reporting the topic we were somehow endorsing agents to counsel their clients to walk-away from their mortgage obligations.
Of course, nothing could be further from the truth…if anything we coached agents how-to help homeowners keep their homes.
Now, several years into the never ending real estate bubble deflation death spiral strategic defaults have gone…as the kids say…viral. When we were growing up the understanding was that the last thing you don’t pay is your mortgage. In other words, always pay your mortgage. Now, oh my…how times have changed.
Of course, the new HAFA Guidelines actually seem to give incentives to defaulting homeowners to do short sales or deeds in lieu. At this point, we applaud the Obama Administrations continued focus on slowing the rate of foreclosure. Read about the new 2010 Treasury Department Short Sale Guidelines NOW. The market will shift back to the positive once the rate of foreclosures stops increasing.
Afterall, its hard for anyone to have confidence in the housing market when you are constantly hearing about home values sliding and foreclosure rates increasing….
Interesting story from Reuters….
How widespread are strategic defaults? Laurie Goodman and her team at Amherst Mortgage Insight yesterday released a report that shows they are indeed on the rise and for reasons we might suspect: negative equity and a more borrower-friendly environment.
The second reason should be kept in mind as we consider President Obama’s soon-to-be-announced plan to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, well, expect defaults to spike.
Strategic default isn’t necessarily synonymous with mailing your keys to the bank and walking away. It may simply mean a borrower choosing to stop payments to the bank when economic incentives would have him do so. Amherst has come up with a novel metric to measure strategic default — the “default transition rate.” DTR looks at the percentage of borrowers who’ve never been more than one payment behind on their mortgage suddenly missing two payments in a row.
Lo and behold, negative equity leads more folks to strategically default, regardless of their credit score and whether they took out a liar loan:
Aparently, borrowers are intentionally defaulting to take advantage of the [HAMP] modification program. Or at least to take advantage of extra time living in the house rent free, courtesy of the modification program.
Amherst concludes:
Borrowers respond to their economic incentives. This has always been the case, be it for refinancing or for defaulting on mortgages that are deeply underwater. Over the past year, however, property values have been largely steady, but the environment has become much more kind to borrowers. There have been foreclosure moratoriums, the emergence of the HAMP modification effort, and the attendant increases of time spent in the delinquency/foreclosure pipeline, as well as a stretching out of the liquidation process in judicial states. As a result, borrowers can stay in their home rent free for a much longer period than was previously the case. However, few of these benefits apply to investor properties. Thus, when we look at the difference pre- and post-HAMP in the behavior of owner-occupied borrowers versus that of non-owner occupants—we find a dramatic difference in performance. Owner-occupied borrowers behave far worse than their non-owner occupied counterparts.
Back in 07 when this phenomena was one of those topics we would receive criticism for reporting on. The critics suggested that by reporting the topic we were somehow endorsing agents to counsel their clients to walk-away from their mortgage obligations.
Of course, nothing could be further from the truth…if anything we coached agents how-to help homeowners keep their homes.
Now, several years into the never ending real estate bubble deflation death spiral strategic defaults have gone…as the kids say…viral. When we were growing up the understanding was that the last thing you don’t pay is your mortgage. In other words, always pay your mortgage. Now, oh my…how times have changed.
Of course, the new HAFA Guidelines actually seem to give incentives to defaulting homeowners to do short sales or deeds in lieu. At this point, we applaud the Obama Administrations continued focus on slowing the rate of foreclosure. Read about the new 2010 Treasury Department Short Sale Guidelines NOW. The market will shift back to the positive once the rate of foreclosures stops increasing.
Afterall, its hard for anyone to have confidence in the housing market when you are constantly hearing about home values sliding and foreclosure rates increasing….
Interesting story from Reuters….
How widespread are strategic defaults? Laurie Goodman and her team at Amherst Mortgage Insight yesterday released a report that shows they are indeed on the rise and for reasons we might suspect: negative equity and a more borrower-friendly environment.
The second reason should be kept in mind as we consider President Obama’s soon-to-be-announced plan to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, well, expect defaults to spike.
Strategic default isn’t necessarily synonymous with mailing your keys to the bank and walking away. It may simply mean a borrower choosing to stop payments to the bank when economic incentives would have him do so. Amherst has come up with a novel metric to measure strategic default — the “default transition rate.” DTR looks at the percentage of borrowers who’ve never been more than one payment behind on their mortgage suddenly missing two payments in a row.
Lo and behold, negative equity leads more folks to strategically default, regardless of their credit score and whether they took out a liar loan:
Aparently, borrowers are intentionally defaulting to take advantage of the [HAMP] modification program. Or at least to take advantage of extra time living in the house rent free, courtesy of the modification program.
Amherst concludes:
Borrowers respond to their economic incentives. This has always been the case, be it for refinancing or for defaulting on mortgages that are deeply underwater. Over the past year, however, property values have been largely steady, but the environment has become much more kind to borrowers. There have been foreclosure moratoriums, the emergence of the HAMP modification effort, and the attendant increases of time spent in the delinquency/foreclosure pipeline, as well as a stretching out of the liquidation process in judicial states. As a result, borrowers can stay in their home rent free for a much longer period than was previously the case. However, few of these benefits apply to investor properties. Thus, when we look at the difference pre- and post-HAMP in the behavior of owner-occupied borrowers versus that of non-owner occupants—we find a dramatic difference in performance. Owner-occupied borrowers behave far worse than their non-owner occupied counterparts.
THE END OF THE GREAT RECESSION? IS IT TIME TO CELEBRATE?
Breaking News: Case/ Shiller Housing Index Shows Second Month In A Row Of INCREASE IN SALES!
“The animal spirits seem to be coming back,” said Robert Shiller, Yale economics professor and developer of the Standard & Poor’s/Case Shiller Home Price indexes. “The psychology does seem to be changing.”
The national home-price index released on Tuesday rose for the second straight month in June, fueling hopes the housing downturn, which is in its third year, is waning. Still, the index was off roughly 15% in the second quarter from the year-ago period. See Economic Report.
In a teleconference Tuesday, Shiller was reluctant to call a definitive bottom in home prices, saying he’s seeing “conflicting signals” in the housing market.
Well then, I will do it. There is a clear bottom in most housing markets for homes that are less than $200,000. Will this last? I think it will. There first time buyers and investors out there that there won’t be any further significant value decreases for homes less than $200k. Now, with that said, if the ‘First Time Buyer Credit of $8,000′ is not renewed….and if the banks make the mistake of dumping too many foreclosures on the market too fast…all bets are off.
On the positive side, the rise in home prices in May and June is a “sudden break in momentum” from years of nearly steady, punishing declines that may signal a turning point. “The roller coaster is now going up,” Shiller said.
Yet he noted what appeared to be a housing recovery in early 2008 “fizzled” when prices resumed their decline. And a long-term chart of home prices makes it look like “we are still in the process of a bursting bubble.” Shiller expressed “great reluctance” to forecast where prices will go from here with the U.S. economy in the midst of the most severe recession since the Great Depression.
Where will prices go? There WILL BE more depreciation for the more expensive…non first time buyer/ Investor price ranges. In some cases this depreciation will be dramatic. We are predicting that the next wave of foreclosures will force the ‘upper end’ housing markets to lose as much as 30%+ over the next 12-24 months.
“Unemployment looks like a bad indicator for the housing market,” Shiller said.
There are other challenges that could snuff out the nascent revival in home prices. One of the biggest threats is the mounting wave of foreclosures as more strapped borrowers struggle to meet their monthly mortgage payments. The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
IF they don’t renew the buyer credit then YES…we are in trouble. But, they will. And I bet they will increase the ‘$credit’ AND make it available to everyone.
Here is an interesting thought for you….the $8000 buyer credit created demand..in many markets there has been so much demand that agents are selling the less expensive homes in 24 hours. What has this in turn caused…competing offers and increasing prices. So, someone was motivated to buy a home because they were getting a ‘credit’ from the government…they may of thought..”heck yeah I will buy now…I will get $8000 in free money”. As a result of this prices are pushed up. Buyers pay MORE for the home than they other wise would have. So, their $8000 in free money is in essence wiped out by the increase in price they are paying….
Indeed, recent experience has taught homeowners that prices can be very volatile, said David Blitzer, chairman of the index committee at S&P, during Tuesday’s call.
On a national level, home prices are back to levels last seen in 2003, but the cities that saw the biggest run-ups also fell the hardest.
“The idea that they could never go down was wrong,” Blitzer said.
He added the data coming out of the housing market in recent months have been encouraging, but warned against breaking out the champagne just yet. Commenting on so-called shadow inventory, he said many sellers have been waiting for an uptick in house prices to put their homes on the market, Blitzer said. This could exacerbate the supply glut and push a recovery further into the future.
Source: MarketWatch.com
Breaking News: Case/ Shiller Housing Index Shows Second Month In A Row Of INCREASE IN SALES!
“The animal spirits seem to be coming back,” said Robert Shiller, Yale economics professor and developer of the Standard & Poor’s/Case Shiller Home Price indexes. “The psychology does seem to be changing.”
The national home-price index released on Tuesday rose for the second straight month in June, fueling hopes the housing downturn, which is in its third year, is waning. Still, the index was off roughly 15% in the second quarter from the year-ago period. See Economic Report.
In a teleconference Tuesday, Shiller was reluctant to call a definitive bottom in home prices, saying he’s seeing “conflicting signals” in the housing market.
Well then, I will do it. There is a clear bottom in most housing markets for homes that are less than $200,000. Will this last? I think it will. There first time buyers and investors out there that there won’t be any further significant value decreases for homes less than $200k. Now, with that said, if the ‘First Time Buyer Credit of $8,000′ is not renewed….and if the banks make the mistake of dumping too many foreclosures on the market too fast…all bets are off.
On the positive side, the rise in home prices in May and June is a “sudden break in momentum” from years of nearly steady, punishing declines that may signal a turning point. “The roller coaster is now going up,” Shiller said.
Yet he noted what appeared to be a housing recovery in early 2008 “fizzled” when prices resumed their decline. And a long-term chart of home prices makes it look like “we are still in the process of a bursting bubble.” Shiller expressed “great reluctance” to forecast where prices will go from here with the U.S. economy in the midst of the most severe recession since the Great Depression.
Where will prices go? There WILL BE more depreciation for the more expensive…non first time buyer/ Investor price ranges. In some cases this depreciation will be dramatic. We are predicting that the next wave of foreclosures will force the ‘upper end’ housing markets to lose as much as 30%+ over the next 12-24 months.
“Unemployment looks like a bad indicator for the housing market,” Shiller said.
There are other challenges that could snuff out the nascent revival in home prices. One of the biggest threats is the mounting wave of foreclosures as more strapped borrowers struggle to meet their monthly mortgage payments. The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
The First-time buyer tax credit is set to go away in November, and rising interest rates could also dampen sales, economists say.
IF they don’t renew the buyer credit then YES…we are in trouble. But, they will. And I bet they will increase the ‘$credit’ AND make it available to everyone.
Here is an interesting thought for you….the $8000 buyer credit created demand..in many markets there has been so much demand that agents are selling the less expensive homes in 24 hours. What has this in turn caused…competing offers and increasing prices. So, someone was motivated to buy a home because they were getting a ‘credit’ from the government…they may of thought..”heck yeah I will buy now…I will get $8000 in free money”. As a result of this prices are pushed up. Buyers pay MORE for the home than they other wise would have. So, their $8000 in free money is in essence wiped out by the increase in price they are paying….
Indeed, recent experience has taught homeowners that prices can be very volatile, said David Blitzer, chairman of the index committee at S&P, during Tuesday’s call.
On a national level, home prices are back to levels last seen in 2003, but the cities that saw the biggest run-ups also fell the hardest.
“The idea that they could never go down was wrong,” Blitzer said.
He added the data coming out of the housing market in recent months have been encouraging, but warned against breaking out the champagne just yet. Commenting on so-called shadow inventory, he said many sellers have been waiting for an uptick in house prices to put their homes on the market, Blitzer said. This could exacerbate the supply glut and push a recovery further into the future.
Source: MarketWatch.com
Wednesday, March 24, 2010
TAX CREDIT HAS BEEN EXTENDED!!!
Governor Arnold Schwarzenegger’s proposal to extend the $10,000 first time home buyer tax credit has been passed by California Legislature. The tax credit would begin May 1st, 1 day after the Federal Tax Credit ends April 30th.
The previous California tax credit limited to a total of $100 million for new home purchases only was exhausted eight months before the proposed deadline. The initial bill credited over 10,000 home buyers. The new bill appears to double the amount assistance.
New California First Time Home Buyer Tax Credit Highlights
• $200 million in funds available on a first come, first serve basis – could help over 20,000 home buyers
• New homes for any taxpayer and new/existing homes for first time home buyers
• “Qualified principal residence” means a single-family residence, whether detached or attached, that is purchased to be the principal residence of the taxpayer, is eligible for the homeowner’s exemption under Section 218, and has either never been occupied or is purchased by a first-time home buyer.
• $10,000 tax credit or 5% of purchase price (whichever is lower)
• Credit given in 3 payments to a taxpayer’s personal income tax returns over 3 year period
Combine reduced prices in homes, 40 year low in interest rates and an incentive back from the state of California and you have the Perfect Storm. If this doesn’t cause a small frenzy during peak purchase season (Spring and Summer), I don’t know what will.
LADIES AND GENTLEMEN......START YOUR ENGINES!!!!
Governor Arnold Schwarzenegger’s proposal to extend the $10,000 first time home buyer tax credit has been passed by California Legislature. The tax credit would begin May 1st, 1 day after the Federal Tax Credit ends April 30th.
The previous California tax credit limited to a total of $100 million for new home purchases only was exhausted eight months before the proposed deadline. The initial bill credited over 10,000 home buyers. The new bill appears to double the amount assistance.
New California First Time Home Buyer Tax Credit Highlights
• $200 million in funds available on a first come, first serve basis – could help over 20,000 home buyers
• New homes for any taxpayer and new/existing homes for first time home buyers
• “Qualified principal residence” means a single-family residence, whether detached or attached, that is purchased to be the principal residence of the taxpayer, is eligible for the homeowner’s exemption under Section 218, and has either never been occupied or is purchased by a first-time home buyer.
• $10,000 tax credit or 5% of purchase price (whichever is lower)
• Credit given in 3 payments to a taxpayer’s personal income tax returns over 3 year period
Combine reduced prices in homes, 40 year low in interest rates and an incentive back from the state of California and you have the Perfect Storm. If this doesn’t cause a small frenzy during peak purchase season (Spring and Summer), I don’t know what will.
LADIES AND GENTLEMEN......START YOUR ENGINES!!!!
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